Stay in for the long term, policyholders are advised

People who have invested their savings in equity-linked products about to mature should stay calm, hold on to their investment and wait for the market to recover, according to investment advisers.

"Unless people are desperate for cash, it is not wise for them to get out of the game," said Mr Simon Thompson of Financial Engineering Network.

Investors who have placed their savings in funds with five, seven or 10-year terms may have planned for the maturity date to coincide with finance-draining events, such as the start of their children's third-level education. But the depressed markets mean they will not now get the returns they are looking for.

One caller to RTE's Liveline programme told Radio 1 this week that the €60,000 he had placed in an Irish Life scope investment in October 2000 had now shrunk to less than €48,000.

The caller had been deterred from withdrawing from the policy last year, when a 4 per cent exit charge would have applied.

A spokesman for Irish Life & Permanent said customers were advised of the risk associated with each of the six funds under its scope investment series.

The most high-risk fund, Techscope, warns that, although the policy has the highest growth potential, it is not for the faint-hearted. Customers can alter their risk profile at any time.

"The question is how long will the fall continue for? Most policies are open-ended, so people don't have to crystallise their loss now," the spokesman said.

Stay in for the long term is the advice financial institutions are giving customers concerned that their savings are at risk.

Mr Jim Garvey, investment manager at Bank of Ireland Insurance and Investments, said they had seen a "significant increase" in the number of calls from worried investors in its managed funds over the past two weeks, particularly from people who entered the market in 2000.

"They're the ones who haven't seen any growth in equities, whereas other investors have seen this before and come through the other side," Mr Garvey said.

Mr David Earle, head of savings and investments at EBS, said the building society was also noticing an increase in communication but very little encashment.

Conservative investments such as tracker bonds may prove more attractive as equities continue to perform badly.

A spokesman for First Active said there had been "great interest" in the building society's latest combination series.

Under the bond, half the investment is equity linked with the other half placed in a deposit account for either one or two years.

The two-year option had the highest take-up rate, which was evidence that investors were "hedging their bets", he said.